Renewable diesel producers utilization at 77%, greatest since July - AEGIS

Biodiesel manufacturers utilization rate struck 89% in Oct, greatest given that June 2023

Better credit costs, stronger diesel need stimulated greater activity - analyst

NEW YORK, Jan 3 (Reuters) - U.S. sustainable diesel and biodiesel producers increase operations in October to multi-month highs, assisted by more powerful margins for the biofuels, according to information put together by advisory group AEGIS Hedging.

Renewable diesel producers used 77% of their overall operable capacity in October, the highest since July 2024, the information showed. Biodiesel plant utilization increased to 89%, the greatest because June 2023.

Rising usage rates and enhancing margins are a welcome relief for the biofuels market, after operators withstood a rough start to 2024 as need growth slowed, leaving the marketplace oversupplied and forcing a number of biodiesel plant closures.

Both renewable diesel and biodiesel are more pricey to produce than diesel, making providers depending on federal government rewards such as tax credits. Among the 2, renewable diesel has actually become the favored fuel for providers, as it enjoys much better rewards and can substitute diesel totally.

Total biodiesel production capability fell 4.2% year-over-year to about 2 billion gallons in October, according to information released by the U.S. Energy Information Administration on Tuesday.

Renewable diesel output capacity rose nearly 19% year-over-year to 4.58 billion gallons in October, the EIA information showed, as many new biofuel plants opened in the previous three years were geared towards it.

Still, oversupply pushed eco-friendly diesel output capability 6% lower in October from a record 4.90 billion gallons in June.

In addition to plant closures, success for the industry in October was enhanced generally by a rise in the value of credits required for compliance with federal biofuel mandates, said Zander Capozzola, vice president of eco-friendly fuels at AEGIS.

D4 Renewable Identification Numbers, released for biodiesel and sustainable diesel production, rose from a low of 56 cents each in September to over 71 cents in October, improving profitability for making the fuels, Capozzola said.

Margins were also assisted by stronger need for diesel, which hit an one-year high in October, raising prices for both the conventional fuel and its alternatives, he stated.

Prices for credits under the Low Carbon Fuel Standard program of California, where most biofuels are consumed in the U.S., likewise increased from listed below 60 cents each in Sept to over 70 cents each in October, according to AEGIS.

"You really had everything rowing in the best direction in October," Capozzola said. (Reporting by Shariq Khan in New York City; Editing by David Gregorio)